Netflix expected to save $14 million in 2014 by ending Saturday DVD shipments

'Saturdays have been low-volume ship days for us,' Netflix spokesman Joris Evers said

Netflix Inc. has quietly stopped shipping DVDs from its distribution centers on Saturdays, a cost-cutting move that signals the company is easing out of the DVD subscription service and keeping its focus on online streaming.

By ending shipments on Saturdays, the company can cut payroll and, one analyst said, save as much as 10% annually on the money it spends to send and receive DVDs to and from customers.

"You end up taking some costs out of the system, which is needed as they get fewer and fewer subscribers on DVD," said Janney Montgomery Scott analyst Tony Wible.

He figured that ending Saturday shipments could save Netflix $14 million this year and $12 million next year. Previously, he had estimated that Netflix's total shipping costs would be $140 million this year and $117 million next year.

Other analysts agreed that it was time for Netflix to make some moves regarding its DVD business.

I haven't seen Saturday shipping from Netflix in years. In fact, I'm not sure they still have any DVDs at all given that all the DVDs in my queue are either unavailable or on very long wait. Frankly, it looks like they're going out of business.

The company saw its DVD subscription service, which is offered domestically only, fall to 6.5 million in March, down 17% from 7.8 million a year ago.

At the same time, subscriptions to its streaming service, offered internationally, skyrocketed 35% to 46.2 million subscribers in March, up from 34.2 million a year ago.

In 2011, Netflix made plans to spin off the DVD portion of its business into a separate service called Qwikster. But users protested, and Netflix scrapped the plan.

Still, it could be years before Netflix shuts down its DVD service completely since it's still generating solid cash flow, said Aaron Kessler, senior research analyst at Raymond James.

Netflix doesn't put much marketing behind the DVD service, but it still generated $204.4 million in revenue, about 16% of its total revenue. In last year's first quarter, the DVD business accounted for 24% of Netflix sales.

Kessler estimated that DVDs will bring in $200 million in operating income this year — "still a meaningful amount."

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